Jerome Powell Remains Federal Reserve Interim Chairman

Jerome Powell continues his role at the Federal Reserve as the board has voted to appoint him as interim chairman until Kevin Warsh officially takes over. This was conveyed in a brief press release stating that such a temporary measure is typical during chair transitions.

Interestingly, the release didn’t detail which legal powers the board is citing for this decision, nor did it clarify that the notion of being consistent with historical precedent lacks solid support in many respects.

The Federal Reserve Act doesn’t specify a clear process for filling chair vacancies. It states that the vice chair can preside in the chair’s absence, and if both the chair and vice chair are unavailable, the board may elect a temporary chair from among its members.

However, Friday’s actions don’t appear to fit this description. Vice-Chairman Philip Jefferson was present and voted in favor of Powell’s appointment. This suggests that the ordinance is meant for temporary absences during meetings rather than an outright vacancy due to an expiring term.

The board has not publicly articulated which legal authority it’s relying upon. Input from the Fed’s general counsel and board leadership hasn’t clarified the legal basis for this action. Powell has often stated that he expects to stay on as chairman past his term unless a successor is confirmed, but he hasn’t provided any evidence to support this claim.

The Fed maintains that this action aligns with past practices seen during similar transitions between chairs. However, the historical record offers a more complex picture than what the Fed has indicated.

Past instances of appointing an interim chairman include Alan Greenspan in 1996, when he served two confirmed terms, and Powell himself in 2022. There were also cases involving Marriner Eccles in 1948 and Arthur Burns in 1978.

Importantly, these previous situations involved some degree of presidential involvement. For instance, when Greenspan stayed on in 1996, he was awaiting renomination, and the same was true for Powell in 2022. The board didn’t act independently against presidential intent in either case. The 1978 situation with Burns is noteworthy; he was appointed after President Carter explicitly named him acting chair, signifying the president’s authority over the appointment.

Another less clear historical instance is Paul Volcker’s role in 1987. Volcker’s term expired shortly before Alan Greenspan was confirmed; during that brief gap, Volcker served as interim chair. Nonetheless, this situation still involved presidential acknowledgment, as Reagan publicly addressed the transition and praised both men.

In previous scenarios, the board had not unilaterally designated an interim chair when a presidential nominee was already in place and about to be sworn in. In essence, these past appointments were often framed as part of a presidential succession plan, reflecting coordination with the president rather than board independence.

Notably, two governors, Stephen Millan and Michelle Bowman, expressed reservations about the indefinite designation. They underscored that any arrangement should re-evaluate through another vote, implying an understanding of presidential authority as key.

Earlier this year, there was tension between the Justice Department and Senate Republicans regarding a Fed investigation, raising concerns that Powell’s term might end before a successor was in place. If the board can install an interim chair independently, it could allow a Senate faction aligned with the outgoing chair to extend that chair’s powers—potentially complicating the transition even if the president’s nomination is ultimately successful.

This action might pave the way for future boards to appoint their own interim leaders during the time frame between a chair’s term ending and a successor’s swearing-in.

Requests for comment from the Trump administration regarding this move by the Fed went unanswered.